Question

Chewy Candy has a beginning inventory of $1,000 with a retail value of $1,800. June purchases were $3,000, with a retail value of $4,700 and retail sales were $4,200. What is the June 30 estimated ending inventory at cost under the retail method?

Answer 1

To estimate the ending inventory at cost under the retail method, calculate the cost-to-retail percentage and apply it to the ending inventory at retail. The cost-to-retail percentage is approximately 61.54%, and the estimated ending inventory at cost for Chewy Candy is about $1,415.42.

Step-by-step explanation:

To calculate the estimated ending inventory at cost using the retail method, we first need to find the cost-to-retail percentage and then apply it to the ending inventory at retail.

1. Calculate the cost-to-retail percentage.
   
   • Beginning inventory at cost: $1,000
   • Beginning inventory at retail: $1,800
   • Purchases at cost: $3,000
   • Purchases at retail: $4,700
   • Total cost: $1,000 + $3,000 = $4,000
   • Total retail: $1,800 + $4,700 = $6,500
   • Cost-to-retail percentage = (Total cost / Total retail) * 100 = ($4,000 / $6,500) * 100 ≈ 61.54%
2. Determine the ending inventory at retail.
   
   • Total sales at retail: $4,200
   • Ending inventory at retail = Total retail - Sales at retail = $6,500 - $4,200 = $2,300
3. Calculate estimated ending inventory at cost.
   
   • Estimated ending inventory at cost = Ending inventory at retail * Cost-to-retail percentage = $2,300 * 61.54% ≈ $1,415.42

Therefore, the estimated ending inventory at cost for Chewy Candy as of June 30 is approximately $1,415.42.

Answer 2

A. $351

B. $949

C. $4161

D. $1416